IIA IIA-CIA-PART4 Online Practice Questions and Exam Preparation

IIA IIA-CIA-PART4 Online Questions & Answers

• Question 201:

  The marketing manager of a corporation wrote an interdepartmental memorandum to the budget manager concerning corrections to the sales forecast for the coming year. What is this an example of?

  A. Downward communication.
  B. Upward communication.
  C. Informal communication.
  D. Horizontal communication.
  D. Horizontal communication.

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  An interdepartmental memorandum, as described, is a horizontal communication in that no superior-subordinate relationship is involved.

• Question 202:

  Which of the following is not characteristic of a mature industry environment?

  A. Consolidation.
  B. Competitive interdependence.
  C. Falling demand.
  D. Strategic focus on deterring entry of new competitors into the marketplace.
  C. Falling demand.

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  Falling demand is characteristic of declining industries. These industries have sustained a permanent decrease in unit sales over the long run.

• Question 203:

  Which of the following is a favorable condition for a firm competing in a profitable, expanding industry?

  A. The firm does not have a strong customer base.
  B. A few suppliers who can restrict supply.
  C. Competitors find it difficult to acquire the firm's customers.
  D. The firm has high costs relative to other firms in the industry.
  C. Competitors find it difficult to acquire the firm's customers.

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  A firm that has successfully differentiated its products through developing a desirable image, better services, cost leadership, the features of the product, or other means is in a favorable competitive position. Competitors find it difficult to acquire the firm's customers, for example, by price cutting. The reason is that the firm's products are perceived to have few substitutes, and brand loyalty is high. Furthermore, barriers to entry are favorable to the firm. These barriers deter competitors from entering the market. Existing firms can increase market share and emphasize cutting costs and increasing value.

• Question 204:

  Groups have often evolved by self-set standards of performance and behavior, usually based on the personal and social backgrounds of the individuals on the job. This establishment of a group culture is referred to as developing:

  A. Role models.
  B. Cohesiveness.
  C. Conformity.
  D. Norms.
  D. Norms.

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  Norms are the standards of behavior adopted by a group when it is in its early stages. The norms of the group are often a composite of the personal and social backgrounds of the individuals who comprise the group.

• Question 205:

  According to a model suggested by Arthur D Little, a consulting organization, market share will tend to

  A. Increase after gains in mind share but not heart share.
  B. Decrease after losses in heart share but not mind share.
  C. Increase after gains in mind share and heart share.
  D. Not be affected by changes in mind share and heart share.
  C. Increase after gains in mind share and heart share.

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  Arthur D Little suggests a three-factor model for assessing a competitor's current and future market share. Market share is the share of the target market. Mind share is the percentage of customers who name the firm as the first that comes to mind" in the industry. Heart share is the percentage of customers who name the firm as the one from which they "would prefer to buy." A competitor that improves its mind share and heart share will ultimately increase its market share and profits.

• Question 206:

  Forward integration most likely results in:

  A. Product standardization.
  B. Reduced access to distribution channels.
  C. Obtaining less information about demand.
  D. Higher price realization.
  D. Higher price realization.

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  Forward integration may permit higher price realization, for example, by moving into businesses in which the price elasticity of demand is relatively high and lower prices must be set. When demand is elastic, raising prices decreases revenue. Thus, the firm may benefit by acquiring customers with highelasticitywhile selling to customers with lowelasticity.

• Question 207:

  When uncertainty about an industry's future is greatest and other markets for the firm's assets are favorable, it should most likely follow a:

  A. Harvest strategy.
  B. Quick divestment strategy.
  C. Leadership strategy.
  D. Niche strategy.
  B. Quick divestment strategy.

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  A quick divestment strategy assumes that the highest net recovery is obtained by sale early in the decline phase. It is then that uncertainty about the industry's future is greatest and other markets for the assets are most favorable. Indeed, divestiture may be indicated during the maturity phase prior to decline. But the firm risks being wrong about the onset of the decline phase. Quick divestment should be chosen when the industry structure is unfavorable, and the firm lacks strengths in the remaining pockets of demand.

• Question 208:

  The least risky method of entering a market in a foreign country is by

  A. Indirect exports.
  B. Licensing.
  C. Direct exports.
  D. Direct investments.
  A. Indirect exports.

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  An indirect export strategy operates through intermediaries, such as home-country merchants who buy and resell the product, home-country agents who negotiate transactions with foreign buyers fora commission, cooperatives that represent groups of sellers, and export-management firms that receive fees for administering the firm's export efforts. Indirect export requires lower investment than direct export and is less risky because of the intermediaries' expertise.

• Question 209:

  In what form of organization does an employee report to multiple managers?

  A. Bureaucracy.
  B. Matrix.
  C. Departmental.
  D. Mechanistic.
  B. Matrix.

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  A matrix organization project management) is characterized by vertical and horizontal lines of authority. The project manager borrows specialists from line functions as needed. This manager's authority is limited to the project, and the specialists will otherwise report to the line managers.

• Question 210:

  Groupthink is defined as:

  A. The tendency to conform and ignore relevant individual Input that is at variance with the majority opinion.
  B. The guidance of groups based upon self-set standards of performance and behavior.
  C. The members of a group developing a solution to a problem after all the relevant information has been considered.
  D. A way of brainstorming ideas to address an issue presented to a group by management.
  A. The tendency to conform and ignore relevant individual Input that is at variance with the majority opinion.

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  Research into cohesive groups has revealed the prevalence of groupthink. Groupthink is conformity to a group's opinion despite information that it may be incorrect.